Lower-income families in New England experience economic fragility that poses barriers to upward mobility in the long term and also has important consequences in the short term, as families are unable to deal with financial distress.
The Boston Fed’s Community Development area leads initiatives to help lower-income households overcome these barriers to financial stability by building assets, using credit wisely, and investing for the future. We also conduct applied research, promote partnerships, and engage stakeholders in identifying and advancing changes in practices to ensure that families have what they need to be financially secure and have fair access to economic opportunities regardless of race, ethnicity, gender, or geographic location. In addition, we are analyzing policies to determine how access to suitable and affordable housing—an essential component of economic security and equity—could be increased for lower-income populations.
Our current strategies to increase the economic stability and mobility of New England’s lower-income families include:
- Bringing attention to racial wealth disparities and encouraging conversations about possible solutions
One of the most pressing economic security challenges the region faces is the prevalence of significant racial inequities in economic conditions, particularly evident in New England’s large racial wealth gap. We are examining the causes of these disparities to help identify and advance policies for reversing this trend.
- Addressing overreliance on debt
We are researching new policies or programs that could help low-income families reduce rising debt burdens and strengthen their financial resiliency.
- Supporting and facilitating short-term savings for emergencies
Emergency savings are associated with improved financial stability, lower levels of problem debt, and may enable individuals to save for activities that can help them advance economically—such as a college education, a home purchase, or starting a business. We are looking at policies and products that could help families weather financial emergencies, manage income fluctuations, and save for longer-term goals.
Past efforts that have contributed to our current economic stability/mobility strategies include:
- The Children’s Savings Accounts (CSA) initiative raised awareness of and promoted research on CSAs for higher education, focusing efforts on studying the policy, practice, and learnings from these programs as part of our strategy to increase household economic security.
- Financial Capabilities in Community College examined the extent to which interventions such as matched-savings programs, financial education/coaching, and college affordability supports help students effectively manage their finances and contribute to increased persistence in community colleges.
- Mobile Technology for Matched Savings probed the effects of text-message reminders on Individual Development Accounts (IDAs), which are an established intervention designed to help low- and moderate-income individuals build assets.